February 3, 2009

Orion Energy Systems, Inc. Announces Fiscal 2009 Third Quarter Results

PLYMOUTH, Wis., Feb 3, 2009 (GlobeNewswire via COMTEX News Network) -- Orion Energy Systems, Inc. (Nasdaq:OESX), a leading provider of energy management systems to the commercial and industrial sectors, today announced financial results for its fiscal 2009 third quarter ended December 31, 2008.

"We reported solid results for the third quarter of fiscal 2009 despite an increasingly difficult operating environment. During the quarter, we continued to see meaningful customer wins by both Orion's direct sales team and Orion's partner network, the successful completion of various scheduled projects for national account customers, and profitability improvements through reductions in discretionary corporate spending and other efficiencies," commented Neal Verfuerth, CEO of Orion Energy Systems. "While we are realistic with regard to the challenges we may face in the coming year, we remain confident in our business model as it delivered profits, positive cash flows and near record revenues for the quarter. Revenues in this difficult quarter were just shy of Orion's historic high water mark seen last year during healthier economic times."

Mr. Verfuerth concluded, "As of December 31, we had $49 million in cash and short-term investments and nominal debt on our balance sheet. Orion's financial strength and flexibility, combined with our people and products, will allow us to aggressively provide impactful and economically sound solutions to the energy and sustainability challenges facing both corporate customers and the electrical grid."

Fiscal 2009 Third Quarter Results

Revenue. Total revenue for the quarter was $22.4 million compared to $23.3 million for the fiscal 2008 third quarter, representing a decrease of 4%. Third quarter revenues reflected a sequential improvement of 19%, or $3.6 million, over the second quarter of fiscal 2009.

Gross Profit. Gross profit for the quarter was $7.4 million compared to $8.3 million for the fiscal 2008 third quarter, representing a decrease of 11%. Third quarter gross profit reflected a sequential improvement of 17.5% over the $6.3 million of gross profit reported for the second quarter of fiscal 2009.

Operating Expenses. Total operating expenses for the quarter were $5.5 million (24.6% of total revenue) compared to $6.0 million (25.8% of total revenue) for the fiscal 2008 third quarter, representing a decrease of 8%. Third quarter operating expenses also reflected improvement compared to the $6.0 million of operating expenses (32% of total revenue) reported in the second quarter of fiscal 2009.

Income from Operations. Income from operations for the fiscal 2009 third quarter was $1.9 million (8.5% of total revenue) compared to operating income of $2.3 million (9.9% of total revenue) for the fiscal 2008 third quarter, representing a decrease of 17%. However, third quarter operating income reflected improvement compared to the $298 thousand operating income (2% of total revenue) reported in the second quarter of fiscal 2009.

Net Income. Net income for the quarter was $1.2 million compared to $1.2 million for the fiscal 2008 third quarter. Earnings per diluted share were $0.04 for the quarter compared to $0.05 for the fiscal 2008 third quarter. Net income results for the quarter reflected sequential improvement compared to the $453 thousand of net income reported in the second quarter of fiscal 2009.

Results for the Nine Months Ended December 31, 2008

Revenue. Total revenue for the nine months ended December 31, 2008, was $57.2 million compared to $58.4 million for the same prior year period, representing a decrease of 2%.

Gross Profit. Gross profit for the six months ended December 31, 2008, was $19.0 million compared to $20.2 million for the same prior year period, representing a decrease of 6%.

Operating Expenses. Total operating expenses for the six months ended December 31, 2008, were $17.2 million compared to $14.4 million for the same prior year period, an increase of 19%.

Income from Operations. Income from operations for the nine months ended December 31, 2008, was $1.7 million compared to operating income of $5.8 million for the same prior year period, representing a decrease of 71%.

Net Income. Net income for the nine months ended December 31, 2008, was $1.6 million compared to $3.0 million for the same prior year period, representing a decrease of 46%. Earnings per diluted share were $0.06 for the nine months ended December 31, 2008, compared to $0.14 for the same prior year period.

Business Highlights



 * Deployed energy management systems in 344 facilities in the third
   quarter of fiscal 2009, representing over 55 million square feet
   retrofitted, and bringing Orion's installed base to 4,387
   facilities.(1) This compares favorably to the 301 facilities and 49
   million square feet retrofitted in the second quarter of fiscal
   2009.

 * Since December 2001, the company has benefited its customers and
   the environment as follows:

 ---------------------------------------------------------------------
                                                     Cumulative From
                                                     December 1, 2001
                                                          Through
                                                     December 31, 2008
 ---------------------------------------------------------------------
 High intensity fluorescent (HIF) systems sold            1,419,428
 ---------------------------------------------------------------------
 Total units sold (including HIF)                         1,825,091
 ---------------------------------------------------------------------
 Customer kilowatt demand reduction                         423,000
 ---------------------------------------------------------------------
 Customer kilowatt hours saved                        6,683,363,511
 ---------------------------------------------------------------------
 Customer electricity costs saved                      $514,618,900
 ---------------------------------------------------------------------
 Indirect carbon dioxide emission reductions from
  customers' energy savings (tons)                        4,389,332(2)
 ---------------------------------------------------------------------
 Square footage retrofitted                             725,678,664
 ---------------------------------------------------------------------

 * Secured ten new Orion Virtual Power Plant(tm) negawatt supply
   agreements during the third quarter, representing gross income
   streams of $780 thousand.  Orion had 27.5 million kWh of negawatts
   under 12 supply agreements as of December 31, 2008.

 * Witnessed continued performance by Orion's VAR partner network.
   Sales to VAR partners for the nine months ended December 31, 2008,
   exceeded prior year sales for the same period by 47%.

 * Added 51 new contractor partners during the third quarter, bringing
   the total network of contractor partners who have conducted
   business on a recurring basis with Orion to over 370 as of December
   31, 2008.  Sales to contractor partners for the nine months ended
   December 31, 2008, exceeded prior year sales for the same period by
   75%.

 * Awarded the prestigious Platts Global Energy Award for Sustainable
   Technology Innovation of the Year, recognizing Orion's integrated
   energy management system as "the single most innovative technology
   advance in the area of green technology."

 * Granted approval by the New Jersey Board of Public Utilities to
   deploy, in partnership with Public Service Electric & Gas Company
   (PSE&G) and General Electric, Orion's integrated lighting system as
   a capacity solution in the port region of New Jersey.  Under the
   program, PSE&G will provide financial incentive to reduce the
   simple pay-back period for Orion's  integrated system, which
   includes wireless InteLite(tm) controls and Apollo Solar Light
   Pipes(tm), to two years.

 * Received Sysco Corporation's prestigious Facilities Supplier of the
   Year award.  This is the second straight year Orion has received
   this recognition, testament to the high value Orion's solutions
   provide to its customers.

 * Repurchased over 3.8 million shares of outstanding common stock
   during the third quarter as part of the $30 million share
   repurchase program originally approved by Orion's Board of
   Directors on July 17, 2008 and supplemented with additional
   repurchase authorization on December 15, 2008.  Orion has
   repurchased a total of 5.3 million shares at an average price of
   $4.27 as of December 31, 2008.

 (1) Orion's total installed base of 4,387 reflects a downward
     adjustment of 7 due to removal of duplicate records from
     historical data.

 (2) Emissions rate reflects recent revision of EGRID database
     (EGRID2007 Version 1.0 - October 2008); without revision
     emissions would have totaled 4,554,716 tons

Recent Developments



 * Orion announced on January 7, 2009, that its Board of Directors
   adopted a shareholder rights agreement, with the issuance of rights
   under the agreement taking place on February 15, 2009 to
   shareholders of record as of the close of business on February 1,
   2009.

Full-Year Fiscal 2009 Outlook

Orion is re-affirming its annual revenue guidance range of 0% to 9% year-over-year revenue growth. Total revenue for fiscal 2009 is forecasted to be between $81 million and $88 million, with the expectation that fiscal 2009 total revenue will likely be close to the bottom end of this estimated range. Orion is also re-affirming its annual earnings guidance with earnings per share for fiscal 2009 estimated to be between $0.06 and $0.11 per diluted share.

Conference Call

Orion will host a conference call on Tuesday, February 3, at 5:30 p.m. Eastern (4:30 p.m. Central/2:30 p.m. Pacific) to discuss details regarding its second quarter performance. Domestic callers may access the earnings conference call by dialing 877-741-4251 (International callers, dial 719-325-4754). Investors and other interested parties may also go to the Investor Relations section of Orion's website at http://investor.oriones.com/events.cfm for a live webcast of the conference call. To ensure a timely connection, it is recommended that users register at least 15 minutes prior to the scheduled webcast.

Orion Energy Systems, Inc. (Nasdaq:OESX) is a leading power technology enterprise that designs, manufactures and implements energy management systems, consisting primarily of high-performance, energy efficient lighting systems and controls and related services, for commercial and industrial customers without compromising their quantity or quality of light.

The Orion Energy Systems, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4540

Safe Harbor Statement

Certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements will include words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" or words of similar import. Similarly, statements that describe future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause results to differ materially from those expected, including, but not limited to, the following: (i) further deterioration of market conditions; (ii) Orion's ability to compete in a highly competitive market and its ability to respond successfully to market competition; (iii) increasing duration of customer sales cycles; (iv) the market acceptance of Orion's products and services, including the Orion Virtual Power Plant; (v) price fluctuations, shortages or interruptions of component supplies and raw materials used to manufacture Orion's products; (vi) loss of one or more key customers or suppliers; (vii) a reduction in the price of electricity; (viii) the cost to comply with, and the effects of, any current and future government regulations, laws and policies; (ix) increased competition from government subsidiaries and utility incentive programs; (x) dependence on customers' capital budgets for sales of products and services; (xi) Orion's ability to effectively manage its anticipated growth; and (xii) potential warranty claims. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and Orion undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, which are available at http://www.sec.gov or at http://www.oriones.com in the Investor Relations section of our website.



             ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
                    SELECTED FINANCIAL INFORMATION
          (in thousands, except share and per share amounts)
           Condensed Consolidated Statements of Operations
     for the Three and Nine Months ended December 31, 2007 and 2008
                            (unaudited)

                          Three months ended      Nine months ended
                             December 31,            December 31,
                        ----------------------  ----------------------
                           2007        2008        2007        2008
                        ----------  ----------  ----------  ----------
 Revenue                $   23,311  $   22,375  $   58,437  $   57,241
 Cost of revenue            15,057      14,955      38,258      38,289
                        ----------  ----------  ----------  ----------
   Gross profit              8,254       7,420      20,179      18,952
 Operating expenses:
 General and
  administrative             3,288       2,438       6,766       7,946
 Sales and marketing         2,260       2,741       6,309       8,164
 Research and
  development                  454         347       1,334       1,138
                        ----------  ----------  ----------  ----------
   Total operating
    expenses                 6,002       5,526      14,409      17,248
                        ----------  ----------  ----------  ----------
  Income from operations     2,252       1,894       5,770       1,704
 Other income (expense):
 Interest expense             (648)        (33)     (1,272)       (141)
 Dividend and
  interest income              286         325         480       1,492
                        ----------  ----------  ----------  ----------
   Total other income
    (expense)                 (362)        292        (792)      1,351
                        ----------  ----------  ----------  ----------
  Income before
   income tax                1,890       2,186       4,978       3,055
 Income tax expense            737       1,032       2,023       1,414
                        ----------  ----------  ----------  ----------
   Net income                1,153       1,154       2,955       1,641
 Accretion of redeemable
  preferred stock and
  preferred stock
  dividends                    (75)         --        (225)         --
 Participation rights of
  preferred stock in
  undistributed earnings      (264)         --        (775)         --
                        ----------  ----------  ----------  ----------
   Net income
    attributable to
    common shareholders $      814  $    1,154  $    1,955  $    1,641
                        ==========  ==========  ==========  ==========
 Basic net income per
  share attributable to
  common shareholders   $     0.06  $     0.05  $     0.17  $     0.06
 Weighted-average common
  shares outstanding    13,889,162  25,203,827  11,774,702  26,398,338
 Diluted net income per
  share attributable to
  common shareholders   $     0.05  $     0.04  $     0.14  $     0.06
 Weighted-average common
  shares and share
  equivalents
  outstanding           22,858,230  26,414,750  20,752,432  28,710,765

 Supplemental
  information:
  FAS 123R compensation
   expense
   Cost of revenue      $       24  $       68  $       68  $      198
   General and
    administrative             185         121         565         546
   Sales and marketing         157         157         267         428
   Research and
    development                 13          12          29          32
                        ----------  ----------  ----------  ----------
    Total               $      379  $      358  $      929  $    1,204
                        ==========  ==========  ==========  ==========


                Condensed Consolidated Balance Sheets
         As of March 31, 2008 and December 31, 2008 (unaudited)

                                                 March 31, December 31,
                                                   2008         2008
                                                ----------  ----------
 Cash and cash equivalents                      $   78,312  $   24,175
 Short term investments                              2,404      24,692
 Accounts Receivable                                17,666      19,144
 Inventories                                        16,789      18,592
 Current assets                                    116,896      89,617
 Property and equipment, net                        11,539      20,949
 Total assets                                      130,702     113,288
 Accounts Payable                                    7,521       8,963
 Current liabilities                                12,606      12,445
 Long term debt                                      4,473       3,813
 Total shareholders' equity                        113,190      96,601

              Condensed Consolidated Statements of Cash Flows
           For the Nine Months ended December 31, 2007 and 2008
                               (unaudited)

                                                  Nine months ended
                                                     December 31,
                                                ----------------------
                                                   2007        2008
                                                ----------  ----------
 Cash used in operating activities              $   (2,115) $     (468)
 Cash used in investing activities                  (1,821)    (33,491)
 Cash provided by (used in) financing activities    86,946     (20,178)
                                                ----------  ----------
 Net increase (decrease) in cash
  and cash equivalents                          $   83,010  $  (54,137)
                                                ==========  ==========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Orion Energy Systems, Inc.

Orion Energy Systems
          Erik G. Birkerts, Chief Operating Officer
          (920) 482-1924

          FD Ashton Partners
          Victoria Paris
          (312) 553-6715

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